Los Angeles private health care expects minimum wage hike

On June 29, 2022, the Los Angeles City Council (“Council”) approved a arrangement it would raise the minimum wage for people working in “covered healthcare facilities” in the City of Los Angeles (“City”) to $25 per hour.

This order could have a profound impact not only on the healthcare workers it targets, but also on private healthcare facilities and the quality and availability of healthcare services for Angelenos. Notably, because the ordinance only applies to private hospitals and clinics in the city while excluding public health care employers (like UCLA and Los Angeles County) and facilities outside the city limits. city, it actually does not directly impact the majority of healthcare employers in the area. The ordinance now awaits Mayor Eric Garcetti’s signature and will likely go into effect before the end of the year.

The Service Employees International Union-United Healthcare Workers West (SEIU-UHW) first sponsored and lobbied for wage increases as part of the “Minimum Wage for Employees Working in Healthcare Facilities” initiative. The SEIU-UHW’s original goal was to put the minimum wage increase to a popular vote in November’s general election. After collecting and confirming enough signatures, the SEIU-UHW successfully applied to register for the November ballot in Los Angeles. However, on June 21, 2022, the Council elected to adopt the ordinance instead of submitting it to voters to decide the matter. Since the first vote was not unanimous, Council members took a second vote on the measure this week and voted 10-0 to pass the ordinance.

The order states that the new minimum wage is designed to “help address burnout, retention issues and worker shortages affecting healthcare workers in Los Angeles.” Currently, health care facilities in the city, like the vast majority of employers, are covered by the city’s general minimum wage of $16.04 effective July 1, 2022. The ordinance creates a special applicable minimum wage only to private health care facilities in the city. . As written, the order seeks to prohibit employers from funding the minimum wage increase by laying off workers or cutting benefits or hours, but it’s unclear how that might be enforced. Employers who fail to comply with the new minimum wage in the ordinance would be subject to the Los Angeles Bureau of Wage Standards ordinance’s administrative fines and penalties, such as Sections 188.07 and 188.08, which include penalties of up to at $120.00 per day’s wages. were withheld from an employee. The order also gives healthcare workers the right to bring a civil action against their employers “on behalf of the public”. In other words, the order appears to authorize health care facilities to bring claims under the Private Attorneys General Act (PAGA).

However, employers can apply for a one-year waiver of the minimum wage requirements in the ordinance if they can demonstrate that meeting the new minimum wage would raise substantial doubt about the employers ability to operate. If an employer can demonstrate with substantial evidence that compliance with the order would raise substantial doubt about the facility’s ability to operate, a court of competent jurisdiction may grant a one-year waiver of the $25 minimum wage requirement. $ per hour.

As noted, the order does not cover most health care facilities in the Los Angeles area, while also extending coverage to employees performing non-health care functions. Significantly, the ordinance is not limited to traditional healthcare workers, such as nurses, respiratory therapists, clinicians, pharmacists, aides and technicians, but extends coverage to common positions, such as janitors. , janitors, cleaners, janitors, food service workers. , clerical and administrative workers, and many other workers if they work in private hospitals, clinics, and nursing homes. Again, the order excludes healthcare workers, managers and supervisors in facilities that are not private.

Opponents of the ordinance note that it suffers from major flaws that result in the very inequalities it is meant to prevent. For example, an employee who works at a Starbucks physically located inside a “covered healthcare facility” would benefit from the minimum wage increase, while a Starbucks employee located across the street from the facility would not. Therefore, people doing the exact same job in close proximity to each other will not receive the same pay. Additionally, healthcare facilities will be prompted or compelled by financial necessity to close cafeterias, gift shops, cafes and similar services physically located within the facility to reduce costs as a result of this wage increase. . This would of course result in the loss of jobs for many employees and a reduction and deprivation of services for patients and their families.

Another significant disparity in the ordinance is its definition of “covered healthcare facility”, which creates an arbitrary divergence and exclusion for public facilities and indiscriminately covers all private healthcare providers, whether a for-profit entity or one of the many private non-profit hospitals in the city. Although the minimum wage increase affects health care workers in private for-profit and non-profit hospitals and other health care facilities, it excludes county and government-owned hospitals, even though these public facilities employ a high percentage of the city’s healthcare workers. Given that the purpose of the order was to recognize and reward healthcare workers who put themselves and their families at risk during the pandemic, the choice to exclude such a high percentage of these workers is counterproductive. productive.

Hospital officials have taken note of the unfair discrepancy, pointing out that the measure is flawed because it creates pay gaps among workers at many of the city’s health care facilities who also feel burned out and unappreciated. Los Angeles’ No to Unequal Compensation Measure coalition, funded by the California Association of Hospitals and Health Systems, voiced its criticism of the measure. The coalition’s website has a fact sheet that highlights the disparities between healthcare workers who would benefit from the pay rise and those who would not. For example, the coalition’s fact sheet demonstrates that a catering worker at a private hospital would receive the higher minimum wage, but not a clinician at UCLA or a county hospital. This sheet summarizes the many types of employees who would be excluded from the order. The coalition’s website also explains how the measure would increase costs for patients, consumers and employers who are “already struggling to make ends meet” and “aggravating inequalities in our healthcare system” as a result of the COVID-19 pandemic.

Because of these discrepancies in the order, opponents argue the measure will have the opposite effect of its original purpose, which was to combat the increased difficulty of hiring and retaining hospital workers during the “Great Resignation.” “. Burned-out county hospital workers, who work in communities most in need, will be encouraged to leave their life-saving positions for a private hospital when they see their counterparts in covered facilities earning more than them. Likewise, despite the ordinance’s attempts to prevent layoffs, rising costs will inevitably lead some facilities to reduce services, relocate or close while increasing both the cost of care and a cup of coffee to the cafeteria at a time when Angelenos are already experiencing historic inflation.

Responding to criticism that the measure only benefits healthcare workers in private hospitals, SEIU-UHW spokeswoman Renée Saldaña said “the city government cannot legally set rates for county and state employees” and that private hospitals made “record profits during the pandemic.” ” while other health care facilities have not. However, this statement is not entirely accurate. Private hospitals failed to make ‘record profits’ during pandemic; instead, federal government grants have helped hospitals survive during the pandemic, which has otherwise put financial pressure on the health care provided. In a study conducted by researchers at the Johns Hopkins Bloomberg School of Public Health, published in JAMA Health Forum on May 13, 2022, it was found that hospitals globally lost an average of $1.00 for every $100.00 earned from patient care activities during the pre-pandemic period, resulting in a margin of exploitation of minus 1%. In 2020, that number dropped to between $7.00 and $8.00 lost for every $100.00 earned, an operating margin of minus 7.4%. These financial losses can be attributed to the postponement of elective procedures and elective appointments and the focus on COVID-19 patients that flooded hospitals, a large percentage of whom were uninsured. In other words, the researchers found that hospitals suffered financially during the pandemic and that relief funds “provided an important lifeline to keep financially weak hospitals running.” Additionally, the study found that hospitals serving disadvantaged patients were the most vulnerable to financial loss, further highlighting the illogical and unfair aspects of the order.

What Los Angeles Employers Should Do Now

Assuming, as is likely, that the ordinance is enacted, employers should proceed as follows:

  • Contact legal counsel to determine if the order applies to your establishment.

  • Work with legal counsel to determine the best way to respond and comply withthe order.

  • Determine if your facility qualifies for the one-year waiver and prepare substantial evidence that compliance with the order would adversely affect the facility’s ability to operate (“substantial evidence” includes documentation of your financial condition, of a parent or affiliated entity, and evidence of the actual and potential direct financial impact of compliance with the order).

  • Avoid laying off workers or cutting benefits or hours to cover the costs of the new minimum wage hike.

©2022 Epstein Becker & Green, PC All rights reserved.National Law Review, Volume XII, Number 187